EU Free Trade Agreements

Bill Esterson Excerpts

Thursday 24th January 2019 Commons Chamber

[Mr Speaker]

The tiger that was previously in the library has now been removed, and the immediate danger has been averted. I think the Minister will be familiar with the Merchant Ivory film in which that exchange occurs. [Interruption.] It is fairly obvious, if one applies one’s mind to it.

[Bill Esterson (Sefton Central) (Lab)]

My hon. Friend the Member for Nottingham East (Mr Leslie) asked a very simple and sensible question. The Minister’s long and rambling answer had a simple summary—clearly, it was no. The Secretary of State repeatedly told us that it was a simple matter to roll over deals on trade with approximately 70 countries, which constitutes 13% of our exports and 12% of our imports—it would be a cut-and-paste job. The Government would be ready on day one after Brexit, he told us. That was never true, was it? Those deals are entirely separate and independent from any deal that we may have with the EU.

If we leave with no deal, can the Minister confirm that these arrangements with third-party countries will fall away, as we have consistently warned? Will he confirm that, without new agreements in place, we could, in the absence of a deal with the EU, have no basis of trade with these countries after 29 March, and would fall back on World Trade Organisation rules? That is an argument for taking no deal off the table if ever there was one.

Will the Minister confirm that many of the terms of those agreements will need to be amended, and could be changed substantively as countries seek to improve on the terms that they have with the EU? Will he also confirm that agreements with countries that have economic partnership agreements are often regarded as being not fit for purpose and are alleged to have been signed under economic duress? The Minister will do well to listen to some of this, as this is the reality of what is going on in his Department. For example, North African countries want to sell their oranges and olive oil to us in far greater quantities than is allowed by the EPAs with the EU, which protect southern European producers.

In the Trade Bill debate in the Lords yesterday, the Minister conceded that the Department had no idea how many countries were ready to roll over their free trade agreements, how many would not, how many would have to adjust their constitutional arrangements, and how long that might take. Will the Minister for Trade Policy confirm that his colleague was right to say so?

The Secretary of State is busy socialising in Davos. Is that not a reminder of the incompetence and overconfidence that he has shown over the past two and a half years?

[George Hollingbery]

The hon. Gentleman opened his question by expressing his view that I had given a long and rambling answer. I am pretty confident that the question was longer and more rambling than my previous answer.

Will there be no basis of trade if we fall out without an agreement? No. There will continue to be the basis of trade that exists for everybody, which is the World Trade Organisation. [Interruption.] Indeed, I do confirm that. That is why we are putting such an enormous amount of effort into transitioning these agreements. Will the terms be amended? Yes; plainly, the bilateral partners with whom we are negotiating have different motivations. That is something that I have made very clear to members of the International Trade Committee when I have talked to them. That has led to some extension of the discussions that we are having, but many of those discussions are going extremely well. I reiterate to the House that I am confident that the majority of these trade arrangements will be put in place by the time we leave the European Union.

The hon. Gentleman also treated us to his analysis of EPAs, saying that they were not fit for purpose. He gave us the example of oranges. The last time I stood opposite him in a debate, he gave us the example of the difficulty that EPAs cause Ghana and its chicken, and indeed Tanzania and its fish. On the Ghana agreement, the fact is—I remember this—that chicken had been completely excluded from the EPA. The point about Tanzania and fish is not entirely relevant to EPAs, as there is no EPA with Tanzania.

My confidence is strong on this issue. I believe that we will have the majority of these arrangements in place. Yes, some of them are challenging. One or two of them are even more than challenging; they are close to impossible. Turkey has clearly been identified as an area where the issue of a customs union makes a deal with it very difficult indeed. I have made these things absolutely plain to the House before. However, I believe that we will have the vast majority of these other arrangements in place. We will protect our consumers and our businesses, which will be able to carry on using preferences.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 20th December 2018 Commons Chamber

[Dr Fox]

Israel is a very important trade partner for the United Kingdom, and our bilateral co-operation has increased. When I met Prime Minister Netanyahu a few weeks ago, we agreed to have a bilateral trade and investment conference in 2019, to increase those relations as far as possible.

[Bill Esterson (Sefton Central) (Lab)]

Merry Christmas to you, Mr Speaker, and to all staff and all Members.

Chambers of commerce across the country contribute to export success through the brilliant advice they deliver all year round. Their direct local knowledge and expertise is much better than the signposting on any website that the Secretary of State might care to mention. In the spirit of the festive season, will he take this opportunity to guarantee the renewal of the contract with the British Chambers of Commerce for the delivery of export advice?

[Dr Fox]

We constantly review the mechanisms by which we can give that advice. One of the things that came across clearly from our consultation on the export strategy was that businesses were looking for peer information rather than information from higher sources. That is why the Government have taken on extra staff for our online community for businesses, so that they can get real-time information from similar businesses.

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[Victoria Atkins]

I am grateful to the hon. Lady for her question. I had the privilege of meeting Sammy some months ago to discuss the complexities of her case. We clearly do not want the family courts to be used as another forum in which abusers can continue their abuse. The hon. Lady will know that I and my colleagues in the Ministry of Justice are working together on the Bill, but also on educating those who work in the tribunal and court systems to be alert to that possibility.

[Bill Esterson (Sefton Central) (Lab)]

T1. If she will make a statement on her departmental responsibilities.

[The Minister for Women and Equalities (Penny Mordaunt)]

I want to ensure that people across the country have financial independence and resilience, as well as a real choice and influence over the economic decisions in their lives. That means doing more for low-paid and financially fragile women, who face multiple barriers and are currently reaping the fewest economic rewards. I will publish a strategy in late spring, outlining our vision and plans to promote gender equality and economic empowerment. It will outline how the Government Equalities Office, from its new Cabinet Office home, will work across Government and with business and civil society to tackle persistent gendered inequalities that limit economic empowerment at every stage of life.

Mr Speaker, may I take this opportunity to wish you and all Members and staff of the House a very merry Christmas?

[Bill Esterson]

The majority of people in insecure employment are women. The right to ask for more hours, which was announced on Monday, already exists, and it is no right at all because the employer can just say no. Will the Minister therefore tell the Business Secretary that if he is serious about making a difference to women in part-time work, he will have to do significantly better than this?

[Penny Mordaunt]

I take a different view and welcome the announcement to which the hon. Gentleman refers, and others that this Government have made on supporting women, whatever stage they are at in their lives and careers. However, I think that we need to do more. That is why I am broadening the remit of the Government Equalities Office and creating an equalities hub in the Cabinet Office, at the heart of Government. We are already working with the Department for Business, Energy and Industrial Strategy, but we do that with every Government Department, because only when we do that will we be able to move at the speed necessary to meet the ambition of women in this country.

Draft Trade Barriers (Revocation) (EU Exit) Regulations 2018

Bill Esterson Excerpts

Tuesday 27th November 2018 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is always a pleasure to serve under your chairmanship, Sir David.

What is the objective of the trade barrier system that we should have? Surely it must be to ensure that we have a robust system in place to support our businesses and workers as necessary and as they might expect. Given the new world order in which might is right, where protections and tariffs are rife and we verge on the prospect of very dangerous trade wars, it must be appropriate for UK businesses to expect the absolute best from their Government. What, therefore, have we been presented with?

At present, we are part of the European Commission trade barriers scheme, which operates as a statutory system. Businesses, trade associations and states may complain to the European Commission if they find evidence of a trade barrier in a non-EU state, as is currently the case with United States tariffs. After leaving the European Union, we will not be part of the TBR scheme—that much has been made clear by the Minister—and it will be replaced by a non-statutory system.

I am surprised that the Government did not automatically debate the issue in a Delegated Legislation Committee. Instead, it took the sifting committee to challenge the Government’s decision, and I am glad that it did so. When the Minister said that the system is drawn-out and complex, he rather let the cat out of the bag about how important it is for us to get it right and for Members of Parliament to be able to debate and scrutinise what is happening.

The sifting committee said that the House might wish to explore further with the Minister the Department’s plan for the new non-statutory reporting mechanism. Opposition Members certainly want to do so. As the explanatory memorandum notes, it is correct to say that other avenues are used for complaints to the Commission about trade barriers, but more trade barriers are being created in the new world order. In 2017, 70 new barriers affected EU businesses, and that number appears to be growing. It is true that of those 70 new barriers, only one was reported to the Commission, and the Government think that that proves that there is no need for a statutory system. The Government plan to replace the current system, but what is it about the new scheme that gives the Minister confidence that it will deliver what business needs?

If we examine the examples, we start to see a bit of a pattern. The Confederation of European Paper Industries lodged a complaint that measures imposed by Turkey on the imports of certain varieties of paper were inconsistent with both the WTO and the EU-Turkey customs arrangement rules. Turkey immediately withdrew the unfair measures because the possibility of action through the statutory system was enough. How does the Minister know that his new system will be as effective as the current one, without the back-up of either the Commission itself and the system it operates or a similar UK version? Previously, the threat of the procedure being used has been sufficient, as the paper industry example demonstrates. Did the Government consider that the reason the procedure is so rarely used is precisely that the threat alone is sufficient? Did the Minister consider that soft power is, in fact, extremely effective? Are the Government missing the point that the current system works very well indeed?

I also understand that a number of industry groups involving both UK businesses and those from the rest of the EU, including in ceramics, are at different levels of raising complaints through the existing trade barriers mechanism, so I put it to the Minister that the existing system is used more than might appear at first glance and, perhaps, more than he indicated in his opening remarks. Perhaps the Minister could advise those currently engaged in actions using the existing system as to whether they should continue their complaints using that system or switch to the UK’s new procedure.

The explanatory memorandum claims that there will be no impact on UK businesses. That seems unlikely, given that some may be involved in existing complaints and that others, including through relationships with other EU businesses, are likely to be in the future. I suggest that the Minister should confirm that the change in procedure will have an impact on UK businesses.

The Department has said that feedback on the effectiveness of the trade barriers regulatory system has been mixed? What does “mixed” mean? What was said in the informal consultation, and should there not be a more detailed consultation on the system that will be adopted? If the Minister wants to intervene to explain the rather quizzical look on his face, I will be delighted to give way. He is choosing not to. What is his plan is for the new system? Will it involve the Trade Remedies Authority? How might that work? If the Trade Remedies Authority is to be involved, does that mean that the Trade Bill is to reappear and conclude its remaining stages? It seems to have disappeared mysteriously into the ether.

The hon. Member for Livingston made the point about the nations and regions. We have debated that at length, and the lack of engagement with and involvement of the nations and regions was one of a number of our concerns about the Trade Remedies Authority. The hon. Lady made a good point about that and it applies in this case, too.

[Hannah Bardell]

I know there is support among Opposition Members for having officers for trade remedies, as we discussed in relation to the Trade Bill. Perhaps we could consider that alongside the issues under discussion. I hope we can work together to pursue that.

[Bill Esterson]

I certainly agree that the need for regional engagement and for the nations of the UK to be involved in addressing trade barriers is incredibly important—as it is for large and small individual businesses across the country.

What will the procedure be during the proposed transition period set out in the withdrawal agreement and the political declaration, in the unlikely event of the Prime Minister’s deal surviving? What will happen if, as seems inevitable, the deal is defeated? If, God forbid, there is no deal, what will happen then?

Paragraph 2.3 of the explanatory memorandum states:

“In the EU, the vast majority of trade barriers are raised via the Market Access Advisory Committee”.

Does the Minister propose to replace that committee, which is a non-statutory part of the current arrangements?

To move on to the Minister’s points about the digital service, there are great concerns among smaller firms, and the organisations that represent them, about the Government’s moving to the use of digital systems in a number of places in government. How will the use of the digital route ensure that smaller firms are not disadvantaged? That is of great concern to many small businesses. Should not the arrangement have been sorted out before the revocation of the existing legislation? I note that the Minister said it would be in place by the end of March. Will he confirm whether that digital system has been tested, whether there is awareness of it, particularly among smaller firms, and how he envisages greater access to and use of it by the smaller firms that might be interested in using it at some time in the future, if not today? That is a wider issue, but it is directly relevant.

Paragraph 10.5 of the explanatory memorandum states:

“Stakeholders from across sectors advocated a forum akin to the EU’s Market Access Advisory Committee in which industry associations and government departments can discuss avenues for resolution before initiating enforcement mechanisms.”

That relates to my earlier question, and I want to ask the Minister why it has not been developed yet—or has progress been made towards achieving such a mechanism?

The trade barrier regulation is only one area of the EU legislation that deals with dumping. The SI before the Committee is part of the process of revoking the EU legislation. What is happening to other pieces of EU legislation that deal with dumping? Specifically, what will happen to EU regulation 2016/1036 on protection against dumped imports, and EU regulation 2016/1037 on protection against subsidised imports?

To return to my main points, we have a system—the Minister made the point that there has been a decline in its use over 25 years—in which trade barriers have been addressed through our membership of the EU. It appears that there has not been an evidence-based approach to considering how effective that system has been, and whether something similar would work. May I suggest to the Minister that, rather than revoking the regulation, it might have been a good idea to make a greater effort to investigate whether the current system was effective and whether the fact that its statutory element was not used very often was a sign that it was working successfully, rather than the opposite? I need to hear from him how the alternatives that he proposes will deliver the same level of protection for UK businesses that we have seen under the current system.

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[George Hollingbery]

I will start by addressing the point made by my right hon. Friend the Member for West Dorset and by the shadow Minister. Given the rather complex circumstances, and to ensure that I get this right, I think it only wise for the Department to back up what I say by writing to the Committee. However, my understanding is that we need to pick between trade remedies and trade barriers. As far as trade remedies are concerned, we will be named as a co-sponsor or co-worker—whatever we call it—when any complaint is brought by the European Union during the implementation period. I will need my officials to write to the Committee to confirm that point absolutely, because I do not wish to mislead the Committee.

As far as trade barriers are concerned, I see no reason why we would need to work particularly with the EU on that front. We will have our own independent trade policy and we will be able to move forward and make the sorts of approaches that we need to make. We will have established our WTO schedules, both for goods and for services, and should therefore be in a position to make our own complaints on that basis. Indeed, we will absolutely be able to make our own representations to individual Governments and bilateral partners, as we do already.

I am not sufficiently confident in my answer about the trade remedies side to assert my righteousness today, but I will clear that up. On trade barriers, I believe that we will be able to carry on with our new regulations, or rather lack of regulation, under our non-statutory system. If I am incorrect about that point, I will make it clear in my note to the Committee.

[Bill Esterson]

I am grateful for the Minister’s comments on both trade remedies and trade barriers. He spoke about the confidence he has in our ability to lay our own schedules at the WTO. He will know, as will other Members, that there are countries that are suggesting that they may object. It only takes one country to do so. What sort of indications and discussions have been had in very recent times—in the last few days—that suggest that those objections have been removed? Without that, this would be very difficult to achieve.

[George Hollingbery]

I absolutely would not agree. We have laid our schedules at the WTO. The EU has been operating on uncertified schedules since 1995. It is in the midst of dealing with that non-certification, with up to 25 members, not 28. It is absolutely the case that, at the moment, the EU is operating on uncertified schedules.

We are quite clear that, from a WTO point of view, it is entirely proper for a nation to lay its schedules and then operate on them, and in the meantime negotiate with anybody who may have problems with those schedules. That is exactly what we are engaged in doing. The Secretary of State has talked about operating an article 28 procedure, in which the statutory route in WTO law is dealt with, and there is a very well understood path through which one then negotiates with bilateral partners on the objections they have to the schedules. That does not mean that a country cannot work at the WTO or have representation at the WTO on those schedules. They are there and they are laid.

I will answer one or two of the other questions asked by the hon. Member for Sefton Central. As I hope I have reasonably demonstrated in the debate, the current regulation is complex, inaccessible and, in particular, locks out small business. Is it a success? No, we can say absolutely without any question that it is not a success. There have been 70 complaints this year, despite the fact that there is a trade barrier regulation within the European Union. That demonstrates to me that there are still issues and barriers.

There is not this magical soft power idea that the hon. Gentleman suggests—that somehow because the trade barrier regulation exists, people are not contravening trade barriers. They plainly are: 70 complaints have had to be dealt with. We see plenty in the Department for International Trade from the UK point of view; I have been involved in several. I absolutely do not take his point that this is somehow a piece of soft power that prevents trade barriers arising.

[Bill Esterson]

It is important to clarify exactly what I said. I did not say that they were not arising; I said that they were resolved, without the need for recourse to the statutory part of the procedure. That is a very different point to the one the Minister appears to have answered. I accept that he may have misinterpreted my words, but that is not what I was saying.

[George Hollingbery]

Quite plainly, all I can tell the hon. Gentleman is that we deal with a great many of these issues outwith the UK and outwith the EU; we have issues with trade barriers with third-party countries that are nothing to do with the EU. They arise; we solve them. That says to me that the regulation is not required and, in fact, what exists at the moment is pretty much what we intend to do in the future. We intend to improve upon it, systematise it and make sure that there is an easily accessible route into it, and an easily accessible stream of information coming out of it to both small and large businesses, so that their business decisions can be informed by the information we have received and/or the information about what has been achieved in terms of getting rid of the trade barrier. I do not accept his contention at all. Dealing with such issues informally seems to work perfectly well for us already. I think it can work better, the Department thinks it can work better and we are progressing to make it work better.

The hon. Gentleman asked about the financial impact on UK businesses. To be absolutely clear, the explanatory memorandum attempts to estimate what the regulation would cost UK business, not what non-compliance is and how it operates and whether somebody is already complaining through it. In essence, if one is repealing a regulation, it is unlikely to put any particular cost directly on business because of the legislation.

We consulted widely with stakeholders who have engaged with us on trade barrier issues. There was no great enthusiasm among them for retaining the regulation. One of our correspondents said that they had used it in the past and it had worked for them, but my experience of this user is that they use the non-statutory route far, far more often and had not used this route in a long time. They seem to us to be sanguine about the fact that we chose to do this through a non-statutory route and improved the way that we were doing it.

The hon. Gentleman asked what the TRA might do in this regard, to take over the TBR regulatory powers. The answer is that the Trade Remedies Authority is there to deal with trade remedies and not trade barriers. It is there to deal with subsidies, dumping and safeguarding. Likewise, he asked about the progress of statutory instruments that are required on subsidies, dumping and safeguarding, which are clearly to do with the Trade Remedies Authority, rather than trade barriers. They will come to the House in due course.

Regarding the non-statutory route that we currently operate, we have extremely good relationships with business about the way we represent them overseas, in all theatres and on all issues. In the admittedly short time that I have been in post, I have found nothing but praise for our network overseas and how it represents businesses. Every time I meet with businesses out in the field, they say to me that they have excellent relationships with the staff on the ground in different countries and that if they raise an issue about trade barriers, it is dealt with. Of course, it is not always solved, but out in post and indeed here in London, in DIT, we follow up every one of those issues. We address the third-party country, we attempt to resolve the issues, and in rare cases where we do not manage to solve the issue, we take further action. Currently, that is done through the Commission, but later it will be through our own seat at the WTO.

The hon. Gentleman asked about industry associations and an appetite for feeding into Government on this issue. We believe there is a case for consulting with industry. Clearly, it would be strange if we did not, particularly in steel and ceramics where there are lots of issues to be dealt with. There are a lot of resources across Government, where forums already exist, and we are looking at using those more as a Department. As yet, how we will do that is undefined and not scoped, but we recognise that there is a resource there and the appetite of industry to contribute.

There is a narrow point to make on the devolved authorities, which will have access to the Department for International Trade’s database on all of these ongoing issues and all the actions that are being taken to try to resolve all the potential barriers.

I promise to write to the Committee to clarify the position on what we will do with trade remedies and trade barriers post-exit, but before the end of the implementation period.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Trade Barriers (Revocation) (EU Exit) Regulations 2018.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 15th November 2018 Commons Chamber

[George Hollingbery]

The Government have only just published the withdrawal agreement, which will be before the House shortly, and the Department will assess all issues of that sort in the context of the proposed agreement.

[Bill Esterson (Sefton Central) (Lab)]

The Secretary of State spoke earlier of how highly regarded UK goods are. That is true of successful exports such as dairy, smoked salmon and vegetables. I noticed that the Minister made a commitment in his initial answer to not dropping our food standards. Given that the United States has made it clear that that is exactly what has to happen to agree any future trade deals, will he now rule out any trade deals, including with the United States, that see any drop in our very high and successful food standards?

[George Hollingbery]

I can only refer the hon. Gentleman to the answer I gave moments ago. We are scoping potential trade deals with all the partners with whom we have announced that we are seeking to do free trade deals, and our position on these standards remains exactly the same: we will not be changing UK law in this regard.

Draft European Union (Definition of Treaties) (Economic Partnership Agreements and Trade Agreement) (Eastern and Southern Africa States, Southern African Development Community States, Ghana and Ecuador) Order 2018

Bill Esterson Excerpts

Wednesday 31st October 2018 General Committees

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Betts.

The four agreements that we are discussing will form the basis for future UK deals with the countries covered by the four agreements. The Trade Bill, which is still going through the Lords, prevents us from discussing the contents of the agreements after today’s debate. Having further parliamentary scrutiny, including of any amendments, once those agreements are rolled over or renegotiated—whichever happens after we leave the European Union—will be entirely for the Secretary of State to decide, so we need to take advantage of today’s proceedings and challenge the Government, because there will not be another opportunity.

Reports suggest that the three economic partnership agreements that we are discussing were agreed under significant pressure. It is therefore highly likely—notwithstanding what the Minister said when he quoted one of his counterparts saying that they are ready to roll the agreements over—that there may be a desire to renegotiate. South Africa’s deputy Trade and Industry Minister when the agreements were signed, Dr Rob Davies, said that they were signed “under duress”, at the risk of having tariff-free access to the EU withdrawn. For those reasons, it seems highly likely that these partners will try to renegotiate, so today’s debate is extremely important.

The statutory instrument relates to four multi-country trade agreements, as the Minister said, which we are party to as a result of being members of the EU. There is one free trade agreement and three EPAs, which relate to trade with developing countries. The objective of the agreements is to increase trade and investment opportunities. The explanatory memorandum lists the advantages of developing nation partners as

“providing duty and quota-free access for exports to the EU; more integrated regional markets; more flexible, simpler rules of origin; no undue competition and a context of wider reforms and helping to address broader trade issues such as technical barriers to trade and labour rights.”

Could the Minister let us know what is meant by technical barriers to trade and labour rights? I could not find any further detail on that point. The explanatory memorandum then moves on to the benefits to

“consumers and workers in Europe by the removal of trade barriers, the promotion of exports from developing countries resulting in wider choice, lower prices, better value and wider ethical choice options.”

The benefits to UK businesses are listed in the impact section of the explanatory memorandum. The estimated increase to UK GDP of £24 million as a result of Ecuador’s accession to the EU-Andean EPA is given as an example of the opportunities presented by removing barriers to trade. The Ecuador protocol of accession includes a chapter on public procurement, and the explanatory memorandum suggests that there may be an impact on UK public services as a result. Can the Minister tell us what that impact is likely to be?

The impact assessment of Ecuador’s accession refers to the relationship between trade openness and economic growth. It then quotes the fall in the poverty rate since China opened up its economy as a “striking example”. China may well be a striking example, but it is also strikingly different from Ghana, Ecuador and the Eastern and Southern Africa states, and the Southern African development community states. They do not have the opportunity of modernising their industries by keeping their borders closed, as happened in China, nor do they have the economic power of China.

The impact assessments each make the point that trade is beneficial. Indeed, paragraph 1.3 of the Ecuador impact assessment states:

“Free and fair trade is fundamental to the prosperity of the EU, the UK and the world economy.”

The key point is that it needs to be fair, not just free.

The impact assessments also demonstrate the benefits of free trade agreements. As my right hon. Friend the Member for Wolverhampton South East said, we are of course a member of a free trade agreement, in a market with 500 million consumers—the European Union. It covers 60% of our trade, either directly with the other 27 countries of the EU, or indirectly through agreements that the EU has with other countries, including those we are discussing today. The EPAs under discussion have already been provisionally applied, of course.

The Ecuador impact assessment says:

“the evidence suggests that FTAs enhance trade flows”,

as our membership of the EU has proved. Significantly, the Ghana impact assessment admits:

“There is very little quantitative evidence on the impact of EPAs.”

We support the objectives of supporting trade with the developing nations, boosting their economies and prosperities, and doing so while boosting our own economy, but we must explore whether these agreements will deliver the proposed objectives. It is telling that the Government acknowledge in paragraph 10.1 of the explanatory notes that there had been criticism of the agreements, but that reference is all they have to say about the criticism. There is the slight exception in that three of the four impact assessments contain an index that refers to section 8—“Sensitivity analysis & risks”. Curiously, in each of the three impact assessments that list section 8 in the index, after section 7, “Impact Tests”, the next items are annex A and annex B—“estimated one-off costs” and “most-traded product lines”—followed by a blank page. There is no content for the “Sensitivity analysis & risks” sections in any of them. The fourth, by the way, does not have a section 8.

Will the Minister explain those omissions and tell us what was meant to be in those section 8s? Failing that—or perhaps in addition—will he tell us what the criticisms of the agreements, which are referred to in the explanatory notes, are? I am afraid I was unable to find any reference to them anywhere in what the Government have written.

To give the Minister time to find answers to those questions, I thought it would be sensible to go through some of the concerns that have been raised. Perhaps he might want to say something about that when he responds. Concerns have been raised about the impact on developing nations and about the regional impact of economic partnership agreements. A common criticism is that “most favoured nation” clauses restrict the ability of developing nations to reach trade agreements with their neighbours, as the same benefits, or better, in such agreements have to go to the EU. Instead of opening up trade for developing nations, the concern is that economic partnership agreements risk restricting trade.

I said earlier that the Government admitted in the impact assessments that there is a lack of quantitative evidence about the benefits. The longest-running economic partnership agreement is in the Caribbean. It started in 2008, but according to the European Commission’s impact assessment from 2014, there has been minimal domestic growth in the Caribbean since the EPA was implemented.

According to the International Monetary Fund, the uncompetitive nature of poultry farming in Ghana has left Ghanaian producers unable to deal with the lower cost of imported food following trade liberalisation. Those are the IMF’s words, not mine. The IMF’s Independent Evaluation Office report on international trade policy from 2009 says that the poultry sector in Ghana was much more vulnerable to competition from imports than IMF staff believed. The IMF forced the Ghanaian Government to reverse the Ghanaian parliamentary decision to raise tariffs to protect the poultry industry, with disastrous consequences for poultry farming in Ghana and for the communities that depended on that farming and its economic benefits.

The experience in a number of African countries has been of moving from self-sufficiency, or near self-sufficiency, in food to reliance on imports. Economies have moved from domestic production of food to foreign-owned production of cash crops such as cocoa, coffee, peanuts, sugar, cotton, rubber, palm oil and tobacco. They have moved away from the production of food and towards a reliance on imports of food.

Let us look at the experience of countries such as Tanzania, where the EU already has an agreement. Fish prices have gone up to such an extent that locals are unable to afford fish that has been caught in Lake Victoria; such fish are now almost exclusively caught for export. Some 49% of fish from Tanzania goes to the EU, and most of the rest is exported elsewhere. Locals have to rely on so-called fish skeletons—the remnants from fish that are caught in the Nile or in the lake and exported. The experience in east Africa is of produce being exported to the EU, driving up prices and undermining food security. In this case, the suggestion is that far from helping trade from developing nations, the east Africa economic partnership agreement has restricted it and made industrialisation and growth harder to achieve. The case of Tanzania and the east Africa EPA is a cautionary tale of what can happen if these agreements are not applied with care.

As we leave the EU, we will, as a result of our EU membership, be party to 70 or so trade agreements that we will need to renegotiate. The four agreements covered by this statutory instrument will need to be agreed again. The Trade Bill, which is slowly making its way through the Lords, makes provision for what the Government call the roll-over of these agreements, but the roll-over depends on whether the third-party countries to the agreements want to sign the same agreement or take the opportunity to revisit it. Given the concerns that I voiced at the start of my remarks, we should not be surprised if that happens with some or all of the agreement we are considering.

[Hannah Bardell (Livingston) (SNP)]

The hon. Gentleman will know that significant concerns have been raised by the devolved nations, particularly Scotland, about the lack of transparency, consent and consultation on trade agreements. I have no doubt that the Government will have to face up to and think about that carefully.

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[Bill Esterson]

I feel as though we are revisiting the debates we had in the Trade Bill Committee, but the hon. Lady is absolutely right. I think the Lords will revisit the points she just made. I reiterate that if the Trade Bill goes through unamended, today will be the only opportunity for Members of either House to consider any renegotiation that may or may not come about on these four agreements, or on any of the 70 agreements that will be affected.

Perhaps the Minister can tell us what the impact of a no deal Brexit will be. In the case of agreement with the EU on the terms of Brexit, there will be a transition period, which suggests that there will be an opportunity to renegotiate these agreements. As we said in the Bill Committee, however, it might take a little longer than the 21 months from 29 March 2019 to 31 December 2020 to renegotiate 70 international trade agreements. That may partly explain the Prime Minister’s hint about the need for a longer transition period. It will not be a case of a cut-and-paste roll-over if any of our partners take the opportunity to renegotiate terms.

Regardless of what the Minister said in his opening remarks, there is every chance that that is exactly what will happen in these four agreements. What happens in the case of no deal? What will the status of these four agreements be from 29 March onwards? That is an important question for the Minister to answer. We have consistently heard just how much time and effort is going into the Government’s planning for the disastrous no deal outcome.

As we consider taking on, in our own right, the economic partnership agreements included in this draft statutory instrument, and as we consider how we apply them as members of the EU, I hope that everyone in this room agrees that it is incredibly important that we take our support for countries in developing parts of the world seriously. Concerns about these economic partnership agreements are very real and need to be addressed.

The importance of listening to all voices is clear when we look at what representatives of affected countries say about the EPAs. Carlos Lopes is the High Representative of the African Union, which supports member states in trade negotiations with the EU, and a former executive secretary of the United Nations Economic Commission for Africa. He said:

“Africans have serious concerns about how the EPAs would affect their industrial development and the African Continental Free Trade Area...Uncertainty arising from Brexit has not helped matters.”

That is first time we have referred to the African continental free trade area, which demonstrates my previous point, namely that the most favoured nation clauses in the order restrict the ability of other African nations to benefit. There are 55 nations in negotiations to conclude the African continental free trade area, and their ability to maximise the benefits of trading with other African countries will be seriously restricted by the need to give European countries the same benefits. Carlos Lopes went on:

“In most areas, the EPAs will actually hurt intra-African trade, weakening trade revenues and undermining trade-driven industrialization in Africa…If the EU is to seize the opportunities that Africa offers in a way that is mutually beneficial, it will need to work with the continent’s leaders to build a new kind of partnership that treats African countries as equals.”

I cannot imagine that anybody would disagree with the call to treat African countries as equals, so we need to be very mindful of exactly how these agreements might be applied.

Vera Songwe—the executive secretary of the United Nations Economic Commission for Africa, and formerly a country director and a senior economist at the World Bank—said that

“there should be a strategic pause on the EPA negotiation processes until the finalization”

of the African continental free trade area. We are not in a position to deliver that strategic pause because of the part of the process that we have reached, but we need to think seriously about why these requests are being made.

I ask the Minister to respond to the concerns raised by those who speak on behalf of the people of Africa, and to tell us how he and the Government intend to ensure that these economic partnership agreements are delivered in a way that benefits African people, and does not disadvantage them in the ways my examples have demonstrated. We should not be reaching economic agreements that disadvantage developing nations; we should be well past that point now, in 2018 in the United Kingdom. For the United Kingdom to benefit in the long term, we need trade to be fair, too. Unless our trading partners benefit, and unless their industries and workers thrive under such agreements, they will not be able to buy our goods and services, any more than they will be able to sell to us. For growth to happen, trade must be reciprocal and win-win, not the win-lose of President Trump.

We in the Opposition accept that these agreements should proceed, but we also see the need for their application to be more supportive of those in developing nations than the experience of Ghanaian poultry farmers or Tanzanian fishing communities would indicate has been the case thus far.

[George Hollingbery]

I will try to take the points made by the hon. Member for Sefton Central in order; I will be brief on some and perhaps develop a couple a little further, but hon. Members present should be confident that I will not take forever.

First, the hon. Gentleman stated that he felt the Trade Bill prevents us from discussing these issues any further, but that is absolutely not the case. Clause 2 of the Trade Bill was considerably amended on Report in the Commons, which means there is now very full discussion of any changes that are to be enacted by statutory instrument. Indeed, a report will be produced on the effects and changes in any free trade deal that is transitioned.

During the debate on the affirmative instruments, there will be a supporting explanatory memorandum, which will point to exactly the changes identified in the report that have been made by that statutory instrument. Therefore, the House has every right, every ability and every chance to debate those changes, and no doubt will do so.

The hon. Gentleman said that it was entirely for the Secretary of State to decide whether something is ratified. For the same reasons, that is absolutely not true. The House will have any number of opportunities to debate all the small changes, or even larger changes—we hope very much there will be no larger changes—in these transitioned agreements. He asserted that EPAs have been agreed under pressure.

[Bill Esterson]

The process that the House will be able to use is to delay, using the Constitutional Reform and Governance Act 2010. The House cannot amend the agreements, can it—unless the Minister is telling me that the Government will table further amendments to the Trade Bill in the Lords?

[George Hollingbery]

As the hon. Gentleman will know, the House can actually delay indefinitely through the CRAGA process, but if it decides not to pass essential modifications that enact the practical legislative effects of any agreement, it will make that agreement difficult to operate. The House will have full opportunity to discuss those SIs in Committee. It is certainly not the case that the Secretary of State gets to decide; nothing could be further from the truth.

We were talking about the EPAs being agreed under pressure, but that is just not true. If it were true, I suspect there would be very little appetite among nations with whom we have these agreements to replicate them, but I can be clear with the hon. Gentleman that there is an appetite to replicate them. As for Rob Davies, the Trade Minister in South Africa, I met him in August and he was keen that we replicate the agreement. We agreed, around a table with officials, that we should instruct our officials to ensure that that was done in a timely fashion and as soon as possible; so either he has changed his mind, or he did not believe that in the first place.

I am not quite sure I understood the hon. Gentleman’s question about the technical barriers to trade, but I am very happy to provide him with some illumination about what they are. We can talk about customs and all sorts of different issues—those are the technical barriers to trade. Technical barriers to labour rights may, I suspect, be legislation within individual jurisdictions.

[Bill Esterson]

Paragraph 7.6 of the Minister’s explanatory memorandum refers to addressing

“broader trade issues such as technical barriers to trade and labour rights.”

I was asking him to explain what he meant by

“technical barriers to trade and labour rights.”

[George Hollingbery]

In that case, I meant exactly what I just said. It is not technical barriers to trade and technical barriers to labour rights, but technical barriers to trade, such as poor customs systems and so on and so forth, which the Department for International Development has very considerable programmes to address. The TradeMark East Africa programme has been enormously successful, for example in reducing the time taken for items to clear customs by 32% over the life of the programme. By “address…labour rights”, we mean that it is also our intention to tackle the issue of labour rights. I hope that will satisfy the hon. Gentleman.

On the reference to public services, EU publicly funded services are excluded from liberalisation in all free trade agreements. That is an absolutely standard clause in all EU free trade agreements, and we are clear that in the free trade agreements we sign, we will also be protecting our public services from private competition. The right to legislate in the public interest in public services will be enshrined in our FTAs.

The hon. Gentleman made the not unreasonable point that the EPAs are not of the same scale as China and so on. That is the whole point of the EPA programme. There is a 20-year period in which liberalisation happens. There are also all sorts of breaks and control mechanisms, and indeed mechanisms for discussing certain issues if they arise and are acute for any particular country at any particular time. I am convinced that the mechanisms that sit around these agreements allow for modification, for change and for emergency procedures to be brought in, to deal with real difficulties that individual countries might face.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 13th September 2018 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

The Federation of Small Businesses describes the export strategy as lacking “definitive detailed interventions”. The Secretary of State would do well to take note of what the FSB says. SMEs are vital to our export success, so I suggest, before he gets carried away by his own complacency, why not listen to what small businesses are saying?

[Dr Fox]

We spend a great deal of time doing so, and in fact I was deeply encouraged by the welcome that we received for the export strategy from the FSB, the chambers, the Institute of Directors and the Confederation of British Industry, who do not share the Labour party’s anti-trade, anti-capitalist, anti-wealth agenda. The Labour party increasingly seems to see the model it prefers for Britain as the Venezuelan model.

Trade Bill

Bill Esterson Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 17th July 2018 Commons Chamber

[George Hollingbery]

I am delighted to tell you, Mr Speaker, that I can accord with your wishes and those of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke).

The Government have been consistently clear that the priority for the UK’s existing trade relationships as we leave the EU is continuity. Our partner countries are clear on that, too, and this Bill is about continuity. Specifically, clause 2 creates a power to help with the implementation of obligations of the trade agreements that we are seeking to transition into UK-only agreements as we leave the EU. I recognise that Members are seeking reassurance that the Government will be transparent about the content of these transitioned agreements and about what might need to change to deliver this continuity, which we have championed for so long.

Indeed, I understand the purpose of the new clause 6 and the associated amendments, tabled in the names of my hon. Friends the Members for Huntingdon (Mr Djanogly), for Wimbledon (Stephen Hammond) and for Bromley and Chislehurst (Robert Neill). My predecessor, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), and I held constructive discussions with my hon. Friend the Member for Huntingdon to ascertain how best we could help that transparency. As a result, the Government have tabled new clauses 12 to 14 and amendments 4, 36 to 39, 42, 71 to 75 and 79. I will now explain them in a little detail.

New clause 12 and the associated Government amendments will place a duty on Ministers to lay a report in both Houses of Parliament. This report will explain any changes made to the continuity agreements when compared with the existing EU third country agreements. The report will be laid in Parliament before the continuity agreements are ratified or at least 10 Commons sitting days before any implementing regulations are laid under clause 2, whichever comes first. We want these reports to be as helpful as possible. That is why they will signpost any significant changes being made, to ensure that existing trade agreements can function effectively in the UK-only context. Implementing regulations made under clause 2 will also now be subject to the affirmative resolution process, which will further enhance parliamentary scrutiny. I have also committed that, for each statutory instrument made under the clause 2 power, the accompanying explanatory memorandum will be explicit in referencing which of the changes identified in the report it plays a part in implementing.

With amendments 44 to 47, we are reducing from five years to three years the length of the period for which the implementing power can be used. The period will be renewable by agreement in both Houses of Parliament.

I hope that my hon. Friend the Member for Huntingdon agrees that these amendments address the spirit of the issues he was seeking clarity on and provide enhanced parliamentary scrutiny.

[Bill Esterson (Sefton Central) (Lab)]

We raised concerns in Committee about the Government’s power grab in the Bill. For 40 years, we have subcontracted our responsibility for trade agreements to the EU, while scrutiny has been delivered through the European Parliament and by our own European Scrutiny Committee, yet the Government are not proposing any equivalent scrutiny processes for agreements that will replace those we currently have through our membership of the EU. This lack of scrutiny is a major issue, and we raised the concerns of business, trade unions, civil society, consumers and many more in Committee.

The Labour party submitted a series of amendments in Committee that embodied a full process of parliamentary scrutiny and extra-parliamentary consultation. The Government responded by saying that the new UK agreements would just roll over the terms of existing EU agreements and would thus need no process of scrutiny, having already been scrutinised.

[Greg Hands (Chelsea and Fulham) (Con)]

Does the hon. Gentleman not accept that we are dealing with existing EU agreements that have already been scrutinised in both Houses of Parliament and that in many cases have already been in effect for a long time—in some cases, decades? It is important to have the ability to scrutinise the agreements if they have changed, but in general I think that he is barking up the wrong tree in alleging that this is an attempt to avoid parliamentary scrutiny.

[Bill Esterson]

The former Minister should have waited, because he anticipated my remarks: the Government’s delegated powers memorandum told a different story. Paragraph 46 noted that the new UK agreements would not just be legally distinct but could include

“substantial amendments, including new obligations”.

In other words, these will not just be roll-overs; they will be new treaties that can introduce wholly new terms of trade between the UK and our trading partners—terms that will be binding on us for years to come.

Government new clause 12 is confirmation that Labour was right to identify the problem here. It will require a report to be laid before Parliament before the ratification of any free trade agreement that will highlight and explain any significant differences between the new agreement and the corresponding EU agreement on which the new agreement is based. It is disappointing, therefore, to see this concession wiped out immediately by Government new clause 13, which will allow them to sidestep the obligation to lay such a report. It will also allow the Government to ratify new agreements without having produced the report in question. Government new clause 14 picks up the same point prior to implementation, but by this time the trade agreement will already have been ratified.

We will support new clause 12, but if the Government really mean what they say, they should withdraw new clause 13. We will also support new clause 3, which pays us the compliment of replicating the amendments that we tabled in Committee and which sets out the scrutiny process that should be adopted for new trade agreements.

--- Later in debate ---

[Bill Esterson]

My hon. Friend is absolutely right. Following the Committee, six major business organisations —the CBI, the British Chambers of Commerce, the Engineering Employers Federation, the International Chamber of Commerce, the Institute of Directors and the Federation of Small Businesses—took the unprecedented step of issuing a joint statement with the TUC, Unite, the Trade Justice Movement, the Consumers Association, or Which?, and other industry bodies, calling for a proper model of consultation and scrutiny to govern the UK’s policy-making process in future.

The Secretary of State delivered his statement to the House yesterday, telling us about future plans for a more transparent and inclusive UK trade policy, but at the same time reminding us that the future process would not apply to the Bill or the agreements that correspond to our existing EU agreements. That is why our amendment 19 is so important: it provides for proper consultation on any substantive new elements in the 40 trade agreements that we need to replace the EU’s existing trade deals. The involvement of the widest possible group of stakeholders is essential if we are to ensure that the new trade agreements are properly designed to give our businesses, consumers, workers and public services what they need.

We argued in Committee that any regulations made under the Bill should be subject to the affirmative procedure in Parliament, not the negative procedure, as originally stipulated in schedule 2. I am pleased to see that the Government have agreed that we were right to insist on parliamentary accountability, as their amendment 75 provides that any regulations made under clause 2(1) will indeed be subject to the affirmative procedure. That is not the further extension to which the Minister referred; it is entirely new, and it removes the need for the triage and scrutiny system proposed in new clause 6. However, it leaves any regulations to be made under clause 1(1), in relation to the World Trade Organisation’s Government procurement agreement, subject to the negative procedure. The Minister did not explain the logic behind that, and I should like him to do so, especially given that amendment 32 will grant the Government the power to extend the disciplines of the GPA to new bodies if they so choose, not just to renamed or merged Government entities.

Worse still, Government amendment 34 will introduce what is effectively a further Henry VIII clause, in that it will grant the Government the power under clause 1

“to modify retained direct EU legislation”

in respect of GPA implementation. Members should note that that is a power in perpetuity, as there is no sunset clause in relation to clause 1. In Committee, we argued for the removal of all Henry VIII powers from the Bill, and we support the further attempt to limit those powers in amendments 6 and 7, tabled by the hon. Member for Huntingdon (Mr Djanogly).

The Government have told us:

“Retained direct EU legislation will operate in a different way to both primary and secondary legislation”,

with

“unique status within the domestic hierarchy.”

The European Union (Withdrawal) Act 2018 distinguishes between “minor” and “principal” types of retained direct EU legislation precisely so that Parliament can apply more rigorous powers of scrutiny to the more important elements. A modification of principal retained direct EU legislation, as envisaged in amendment 34, could therefore have a constitutional significance analogous to that of modifying primary legislation. Introducing to the Bill what is effectively yet another Henry VIII power, with no sunset clause to limit its future application, is a serious challenge to parliamentary democracy, and the Minister has not explained why the House should countenance such a move.

New clause 23 would give the devolved Administrations the right to veto a trade agreement before ratification. I simply point out that international agreements are a competence of the UK Government under the devolution settlement, which is why we will not support that proposal.

In his statement yesterday, the Secretary of State recognised the problems that are caused when Governments sign off trade deals that do not have public legitimacy. However, he has failed to follow the logic of his own statement in respect of the 40 agreements that we need to replace our existing EU deals. Even given the Government’s concessions, the Bill is still woefully lacking in transparency and scrutiny, and such a democratic deficit needs to be addressed. As the CBI representative asked us during the Committee, “If not now, when?”

[Gillian Keegan (Chichester) (Con)]

Thank you, Mr Speaker, for giving me the opportunity to speak in the debate.

I served on the Committee, and it is clear to me that we should pass the Bill in order to build the legal foundations that we need to support global trade by ensuring that existing trade agreements via the EU can continue, providing access to overseas procurement opportunities—an important market worth £1.3 trillion—and protecting our business from unfair practices via the new Trade Remedies Authority.

There is much debate about the shape of the future trading relationship between the European Union and the United Kingdom, but the Bill is required for every situation that our country will face as we leave the EU. It seeks to ensure that we will continue to enjoy the benefits of trade deals that the EU has done with more than 40 countries around the world. There is, however, an inherent assumption that the UK will reach agreement on the terms on which we continue trading with our biggest partner, the European Union. Any “no deal” scenario is likely to have an impact on how rules of origin are calculated in the trade agreements.

This is complex stuff. I think we all understand that we are making big decisions that will have an impact on businesses—both large multinationals and small and medium-sized enterprises—which export to or import from the EU. As someone who has worked in car manufacturing, financial services and technology for nearly 30 years, I am unfortunately burdened with some knowledge of how all this works and of the operating models that have emerged over the last 40 years, making many industries, such as car manufacturing, finally competitive. In the real world there is no such thing as a hard or a soft Brexit; there are just degrees of risk. The Prime Minister is seeking a low-risk Brexit in her Chequers White Paper—one that involves listening to businesses that have built highly integrated supply chains, such as Rolls-Royce in my constituency.

Of course it is possible to find examples of car parts coming from outside the EU without a problem, but the question is one of both scale and financial impact. Only a business will have a truly accurate view on this, but it is safe to assume that introducing costs will have a negative impact on businesses large and small throughout the country. They will want to avoid going back to the days when supply chains were not highly integrated and efficient. They will need to hold stocks in warehouses or lorry parks. I am probably the only person in the House of Commons who has sat in customs waiting to rescue a stranded part while a car production line lay idle. Delays are quite simply the difference between profit and loss. The same applies to agricultural goods. We have a thriving growers’ business in Chichester, and export more than £1 billion of perishable goods to the EU every year. Customs delays and perishable goods are two words that do not belong in the same sentence. That is why I completely support the pragmatic approach to goods set out in the Chequers White Paper and I believe it will also enable us to make future international trade agreements as envisaged in this Bill.

But as well as achieving these outcomes, we have to respect the referendum result. The British people voted to end freedom of movement and to get back control of their borders, laws and money. We can all have views on whether a better deal could be negotiated. These are views, not facts. However, I cannot help thinking that if we had been offered a deal a few years ago that ended free movement, stopped future payments to the EU, continued frictionless trade, and regained control over our fisheries and farming policies with no hard border in Northern Ireland, we would have readily agreed; in fact, we would have bitten the EU’s hand off.

Every successful negotiation requires compromise, and perhaps the Rolling Stones express our current predicament best in one of their greatest songs: “You can’t always get what you want, but sometimes you can get what you need.”

UK-Israel Trade

Bill Esterson Excerpts

Tuesday 3rd July 2018 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Mr Evans.

I congratulate the hon. Member for Bolton West (Chris Green) on securing the debate and I welcome the hon. Member for Beverley and Holderness (Graham Stuart), who is responding to his first debate as a Minister after his enforced Trappist-monk silence in the Whips Office in preceding years—I will not go into what happened before that. I welcome the Duke of Cambridge’s comments on his timely visit. He was right to speak about the importance of economic and trade ties between the UK and Israel, but it is also right to debate where we agree and where we have reservations about our relationship.

The EU-Israel association agreement has governed trade relations between Israel and the UK since it came into force in June 2000. It grants Israeli exports preferential access to the UK market, along with the markets of other EU member states. It was supplemented by an agreement on agriculture that came into force at the beginning of 2010, and by a mutual recognition agreement on pharmaceutical products that came into effect in January 2013. Labour would welcome a new trade agreement with Israel to maintain the same market access opportunities for goods, and to deepen a potential relationship in the trade of services, where the UK has an obvious comparative advantage.

As we argued in the Trade Bill Committee, however, no Government should have a blank cheque to introduce new terms of trade without first undergoing a process of external consultation with business and other stakeholders, as well as a proper process of parliamentary scrutiny. The Government’s delegated powers memorandum to the Trade Bill makes it explicit that all the UK trade agreements needed to replace the 40 existing EU trade agreements with countries such as Israel will be legally distinct treaties. Moreover, the same memorandum acknowledges that the powers afforded to the Government under the Bill would allow the

“implementation of substantial amendments, including new obligations.”

Business representatives giving evidence to the Trade Bill Committee expressed considerable concern.

[Mr Harper]

Will the hon. Gentleman give way?

[Bill Esterson]

I will not give way, because we have been given so little time.

[Mr Harper]

But the hon. Gentleman said he was interested in parliamentary scrutiny.

[Bill Esterson]

This is relevant, because the Israeli trade agreement will roll over, which is covered by the Trade Bill.

However, the Government have so far failed to confirm that they would inform business of any substantive changes to the terms of trade between the UK and its trading partners in the trade deals being negotiated to replace the existing EU ones. Will the Minister take this opportunity to reassure business that the Government will let it know in advance about any proposed changes to the terms of trade under which companies will be required to conduct their operations, so that they can have the required input into those negotiations before it is too late?

The existing EU trading relationship with Israel is predicated on an understanding that export preferences are available to goods produced in Israel only, and not to any goods produced in the occupied territories. Furthermore, Gordon Brown’s Government introduced labelling guidelines to ensure that consumers are properly informed as to the origin of the produce that they see in the shops and as to whether goods are from settlements in the illegally occupied territories. I trust that the Minister will confirm that that crucial distinction will be honoured in any future UK-Israel agreement. I look forward to hearing what further measures the Government are proposing to take to reinforce clarity on that point.

[Mr Harper]

Will the hon. Gentleman give way?

[Bill Esterson]

I will not give way; I have told the right hon. Gentleman that already.

Will the Minister confirm that any UK-Israel trade agreement will maintain the existing clarity about the fact that market access preferences offered to Israeli exports into the UK do not extend to goods produced in settlements in the illegally occupied Palestinian territories? It is extremely important that we maintain cross-party recognition of the status of the settlements in the west bank.

The Government have consistently reiterated that the UK considers those settlements illegal under international law, and they have continued to speak out forcefully against Israel’s expansion of settlements. Last October, the Foreign Secretary expressed his concern at Israel’s approval of settlement construction permits in Hebron for the first time in 15 years:

“Settlements are illegal under international law and undermine both the physical viability of the two-state solution and perceptions of Israel’s commitment to it.”

We agree with those concerns about the occupied territories.

From the Trade Bill Committee, we know that Ministers intend to replicate the existing EU-Israel trade agreement exactly. Will the Minister confirm that that will also apply to the human rights clauses and that the Government intend to enforce those clauses once we have left the European Union? Will he confirm that the Government fully support the human rights of all those who will come under the ambit of any future trade agreement between the UK and Israel? The trade preferences granted under the EU-Israel association agreement are conditional on respect for human rights by both sides. Article 2 of the agreement reads:

“Relations between the Parties, as well as all the provisions of the Agreement itself, shall be based on respect for human rights and democratic principles, which guides their internal and international policy and constitutes an essential element of this Agreement.”

I trust that the Minister will confirm that respect for human rights and democratic principles will be an essential element of any new UK-Israel agreement.

Last year, Labour’s manifesto said that trade policy should prioritise human rights through our agreements with other countries. We reiterated the importance of human rights in trade agreements during the Trade Bill Committee proceedings in January. They are particularly important in the light of ongoing human rights concerns in Israel and Palestine, yet in February, in a written answer in the House of Lords, the Government stated that they had as yet made no assessment as to Israel’s compliance with the condition in article 2 of the EU-Israel association agreement that it respect human rights and democracy. Will the Minister assure us that the Government will undertake such an assessment as part of a due diligence process when they move towards a new UK-Israel agreement?

Concerns about human rights can dominate the public debate, and if we had longer, we could go into arms sales as well. Perhaps the Minister will comment on the Government’s commitment to the consolidated criteria on arms export controls and the review of whether UK-produced equipment was involved in the use of lethal force by Israeli forces in the last few months.

It is important, however, to recognise the potential for successful trade with Israel. Together, pharmaceuticals and motor vehicles account for almost 30% of our exports to Israel, so supporting those sectors is important. The jobs that they and their supply chains bring are vital to supporting communities, but if the broader trade picture is botched, both sectors will be at risk from the non-tariff barriers that affect their supply chains, due to the just-in-time nature of vehicle components and the risk of drugs degrading in transit.

Our relationship with Israel does not exist in a vacuum; it is directly affected by our relationships with third countries and the wider world. Trade with Israel currently benefits from the fact that we are part of the EU and from the application of rules of origin and regulatory alignment. This weekend, the Cabinet needs to resolve its differences and produce a third way that delivers the certainty needed by business about border arrangements and non-tariff barriers.

Any trade deal that the UK makes with Israel must include strong guarantees that democratic principles and a fundamental respect for human rights will form a large component of that deal. Our policy on trade with Israel is to support a progressive trading relationship that brings jobs and prosperity at home and that also delivers benefits to the Israeli and Palestinian peoples. Any future UK-Israel trade deal must be judged against those goals—

[Mr Nigel Evans (in the Chair)]

Order. I call the Minister.

Oral Answers to Questions

Bill Esterson Excerpts

Thursday 28th June 2018 Commons Chamber

[Dr Fox]

Far from turning our back on any trading partners, we are seeking a full, transparent, comprehensive and liberal trading agreement with the European Union, and we will seek others. When it comes to protecting British industries, we can do that only when we have a trade remedies authority in place, and I have to remind the hon. Gentleman that he and his party voted against the Trade Bill, which establishes that authority.

[Bill Esterson (Sefton Central) (Lab)]

The Secretary of State’s reluctance to support EU countermeasures to combat Trump’s trade war, and the Government’s opposition to every amendment that we proposed to the Trade Bill and the Taxation (Cross-border Trade) Bill, speak volumes about his Government’s true intentions. When will he give the trade remedies authority the board members it will need if it is to stand up for UK businesses and consumers? And when will he put an end to the impression that the UK’s Secretary of State would rather back Donald Trump’s policy of America first?

[Dr Fox]

That question was wrong on so many issues that I do not know where to start. Rather than being against countermeasures, the United Kingdom supported the European Union—as I have done several times in this House—in saying that we believed that what the United States did was incompatible with WTO law and that we were therefore against it. And it is the height of cheek to demand that the Government should put members on a board that the Labour party tried to prevent us from establishing in the first place.

Leaving the EU: Future Trade Remedies

Bill Esterson Excerpts

Tuesday 17th April 2018 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Stoke-on-Trent South (Jack Brereton). He made some extremely important points, which I shall touch on. I will also mention some of the comments from the hon. Member for Hornchurch and Upminster (Julia Lopez).

Trade remedies are a key element of our future trade policy. Without adequate trade remedies, we will become the dumping ground for not only Europe but the rest of the world. That point was made to us by Gareth Stace of UK Steel when he gave evidence to the Trade Bill Committee. Trade remedies are the means by which we protect our industries and our economy—meaning producers and consumers. What that protection looks like is very topical, given the imposition of tariffs of up to 25% on steel and aluminium imports into the US—[Interruption.] The hon. Member for Stoke-on-Trent South is not the only one struggling with his words today.

Those tariffs have been imposed by President Trump on the spurious grounds of national security. The danger exists that United States-bound steel will now be dumped in the UK instead, as we saw China do just a few years ago, which led to a crisis and the appalling news for the people of the north-east with the closure of SSI in Redcar. That is why an international, co-ordinated approach on anti-dumping is essential and why a common approach is needed to trade defence.

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

I congratulate the hon. Member for Stoke-on-Trent South (Jack Brereton) on securing this very important debate. I want to touch on the things that my hon. Friend the Member for Sefton Central (Bill Esterson) has just said about dumping. In 2015-16, when the steel crisis was a huge issue, there were 92 EU trade remedies and those covering steel were vital in stemming the flow of under-priced Chinese steel, but ever since, the Tories have pushed back against any new measures in the EU to defend our industries from that arising again. I would like to know whether the Minister will give some assurances, particularly at this difficult time in the steel industry’s history, to reassure the manufacturers, the workers and UK Steel, which has been mentioned, that their industry will get the protection that it deserves and will survive the latest crisis.

[Bill Esterson]

I am grateful to my hon. Friend for the intervention. I was about to make the same point. She is absolutely right to say that we need to hear from the Minister what his intentions are.

The EU does not want the UK to be swamped with dumped goods, whether that is steel, ceramics or washing machines, because if that happened, such goods could enter the EU market from the UK. Equally, UK businesses do not want dumping, because it is unfair competition. Lack of protection in the UK risks thousands of jobs in the UK. It is no good the Minister’s saying that it means cheaper goods for consumers—as I have heard him say on countless occasions—because the workers whose jobs are at risk are consumers as well. No job means no wage to buy the goods. A lack of trade defence is bad for producers, workers and consumers, yet that is what there has been far too often. My hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss) is right to highlight exactly what happened in the steel industry, because when the Government failed to support EU trade defence measures against Chinese steel dumping and acted too late to intervene and save SSI, it was the Conservative group of MEPs, at David Cameron’s prompting, who were the cheerleaders in the European Parliament against Europe-wide action. That included their blocking attempts to end the use of the lesser duty rule.

However, protection and the use of trade remedies is not the same as Trump-style protectionism. Trade remedies should be about the creation of a level playing field that defends domestic producers against unfair competition from dumped goods. They are an essential policy tool to correct multilateral distortions. Failure to use anti-dumping measures, in the name of free trade, misses the point that for trade to be free, it also has to be fair. Adjustments are needed in the event of Chinese or Russian state subsidies or distorted pricing of raw materials, or to address Trump’s tariffs. The European Commission is due to vote soon on higher anti-dumping duties to tackle raw material distortions, so it is incredible for the Government to say, as the Minister has, that they will vote against those measures.

That brings us to the customs Bill—the Taxation (Cross-border) Trade Bill—and the Trade Bill. As the hon. Member for Livingston (Hannah Bardell) said, we should be debating the amendments to the two Bills on Report in the main Chamber, not having a general debate in this Chamber, but as we are, let us look at what the Bills will do.

The Government are planning to give themselves the power to decide not to act on behalf of UK industries, in favour of the consumer interest. That will be a political decision, balancing the interests of jobs in one area of the country against the interest of consumers—a point made to us by George Peretz, QC, when he gave evidence to the Trade Bill Committee. Trade remedies are essential to protect British industries, whether that is steel, ceramics, tyres, chemicals or pharmaceuticals. The Minister will no doubt say—he has said it before—that the lesser duty rule has been effective in tackling unfair trade. He wants to continue to apply it at the very moment when the EU is moving away from it, so tell us: where is the evidence to support that approach? I am glad that he is nodding, because I am looking forward to hearing his answer. Ask workers who used to work at SSI. Ask the MTRA. Ask industry and workers. They believe in strong trade remedies and they want to know the reason why the Government are taking a different approach.

The continued application of the lesser duty rule will see dumped goods diverted to the UK, and as we leave the EU, divergence in trade remedies will add to the damage done to the UK economy. The Minister is fond of saying to me and my colleagues that we are against the creation of a trade remedies authority. He knows that that is not true, of course, but that does not stop him saying it. The difference between him and me is that I want the Trade Remedies Authority to be effective. I take seriously the importance of trade remedies in creating a level playing field for our producers so that they can compete in international trade in a fair market. That is why we tabled a reasoned amendment on Second Reading of the Trade Bill that stated categorically our support for the creation of a trade remedies authority, but we believe that the Trade Remedies Authority should be representative of all sides of industry; it should include representatives of producers, trade unions and each of the devolved Administrations. We tabled amendments to that effect in Committee, as did the SNP. In addition, the chair of the TRA should go through parliamentary scrutiny of their appointment, rather than being placed in post by the Secretary of State; Parliament should also have its say on the membership and non-executive appointments. I totally agree with the hon. Member for Hornchurch and Upminster that the Select Committee on which she serves should be scrutinising all these appointments. The Government are using ministerial discretion in the establishment of the TRA before the legislation has been passed that sets it up, and the Minister should explain why, as ministerial discretion is usually reserved for matters of disagreement on spending within a Department.

British industry needs a strong, robust and independent Trade Remedies Authority that will use international best practice. Our amendments to the customs Bill and the Trade Bill will be designed to achieve the objective of giving our industry a level playing field. The Minister and his hon. Friends should support our approach or introduce their own amendments to do just that; otherwise, workers in the Potteries and many more across the country will face the possibility of the same fate as steelworkers faced in Redcar just a few years ago.

[Mr Philip Hollobone (in the Chair)]

If the Minister would be kind enough to finish his remarks no later than 5.42 pm, that would give Mr Brereton time to sum up the debate.

--- Later in debate ---

[Greg Hands]

I very much agree with the hon. Lady. It is perfectly possible and quite likely that of those nine members, one or more will originate from the devolved nations. The point is, however, that they should be appointed for their expertise in assessing some of these quite technical aspects, such as the determination of dumping, the calculation of injury and so on. The point is not to appoint them to represent a nation, region or particular stakeholder of the UK, but to have an interest across the board. She mentioned the possibility of satellite offices. I gave an indication of the likely size of the body.

[Bill Esterson]

I am puzzled by the Minister’s answer, as I was when he said the same thing in the Bill Committee. I do not understand why he does not see the benefit of having a mixture of independent members, who quite rightly have the expertise that he sets out, and a number drawn from different interest groups. There could be a balance of the two to reflect the needs of the different parts of the economy and the United Kingdom.

[Greg Hands]

I feel that I have already answered this. We want a set of people who have expertise in the subject matter, rather than who come from a particular perspective, body, nation or region. That is the most important thing. Returning to the question of location, I think satellite officers would add cost, but I stress to the hon. Member for Livingston that we have yet to make a decision on where the location of the body should be. Again, that will be driven by where we can access the expertise that would be needed for this Trade Remedies Authority. I mentioned earlier that the Department for International Trade has placed a significant part of its operation in Scotland, for example through the oil and gas team in Glasgow, so as a Department we are not averse to placing something in one of the devolved nations of the UK.

I do not want to labour the point, but the hon. Member for Sefton Central (Bill Esterson) goes on about his reasoned amendments. Mr Hollobone, given your long years in the House, you know perhaps better than anybody that when you put down a reasoned amendment, it normally means that you wish to vote for the reasoned amendment, because you wish to propose some way in which to improve the legislation, but you would not normally vote for a reasoned amendment and then vote against the Second Reading of the Bill. My point is that by voting against the Second Reading of the Bill, the hon. Gentleman showed that he disagreed with the central core of the Bill, part of which, of course, is to set up the Trade Remedies Authority.

This Government firmly believe in the benefits of free trade—I will come back to some of the other points raised in a moment—for consumers, earnings and jobs. My hon. Friend the Member for Stoke-on-Trent South spoke powerfully about the importance of the ceramics industry for his constituency, which is a huge UK success story as an industry. Other hon. Members have spoken about their own local industries as well. Our manufacturers benefit from trade. Manufacturing makes up 8% of our economy, but most of our exports. I think we all agree that free trade does not mean trade without rules, whether product safety or IP protection; some of the most important rules will be our system of trade remedies.

WTO members are permitted to take action where their domestic industry is suffering harm as a result of unfair trade practices such as dumping, where foreign companies sell their products in the UK for less than they are sold at home, or subsidies, which let foreign companies sell goods in the UK at a lower price than they would otherwise be able to. Members can also act in response to harm caused by unexpected surges in imports. In such cases, members can introduce safeguard measures to give industry time to adjust against unexpected surges in imports. Well-functioning trade remedies can level the playing field for domestic industry, by counteracting any unfair subsidies, dumping or unexpected import surges. They can also deter dumping and unfair subsidies from happening in the first place. It is important to have these first and foremost as a basic matter of fairness. Our industries should not lose contracts and our workers should not lose jobs because a foreign company has gained an unfair advantage. It would also be unfair if jobs were lost that could have been saved if only industry had been given time to adjust. That is why we are introducing a rigorous and robust system of remedies, which provides for the full suite of powers offered under WTO rules.

My hon. Friend the Member for Stoke-on-Trent South raised points about existing EU trade remedies. He should bear it in mind that we have just finished a call for evidence on the existing EU trade remedies. That call for evidence closed on 30 March. The response was good. We will be looking at our response to that in due course. We have been clear that when we operate our own trade remedies system, we will transition those measures in the EU system that matter to UK business. We received over 70 responses from producers and other interested parties in that consultation. Most importantly, I can assure hon. Members there will not be one day when a UK industry that needs protection from unfairly traded imports will be left alone.

I will quickly answer the point made by the hon. Member for Scunthorpe about a transparent approach. The Government will use secondary legislation to set out the details of the TRA’s framework. That is very important. Mr Hollobone, you will know from your years in the House that secondary legislation is not on the face of it particularly welcomed by legislators, but it is important in this case to be able to have a dynamic body of law that particularly reflects recent WTO case law, rather than write all of these details on to the face of the two Bills that are currently passing through the House of Commons. In particular this secondary legislation will include the different dumping methodologies and the level of remedy required to address injury to UK industry. We are meeting trade bodies in the coming days to talk about some of those details. In the future, the TRA will set out the way in which it has carried out its calculations in any investigation as part of a commitment to transparency.

My hon. Friend the Member for Stoke-on-Trent South asked about the de minimis threshold. At what level would an investigation simply not be taken on, because the amount of product produced in the UK was below a particular amount? If UK producers have a negligible share of the total UK market, the TRA would not initiate an investigation, as it would be unlikely to result in measures. For example, a company could be the only producer of widgets in the UK and therefore meet the WTO requirements to bring a case, but if that company produced a negligible proportion of the widgets actually bought in the UK—in other words, the total market that is there—putting duties in place would have a disproportionate effect on the rest of the market, much of which would not necessarily be consumers, but could be other businesses and industries purchasing that product. That is why we will have a de minimis threshold.

In special cases, the TRA could choose to waive the threshold, which, by the way, we have not yet set. That would help to avoid a scenario in which an industry’s market share is negligible precisely because of the impact of dumped imports, or in cases involving an emerging UK industry struggling to establish itself in the face of dumped or subsidised imports. I assure my hon. Friend that it will reflect a de minimis level, but there will be exceptions. The TRA will be able to overrule.

My hon. Friend asked whether EU measures will be transitioned for the full five years. We have agreed that EU trade remedy rules and regulations will continue to apply during the implementation period. We will assess which EU measures matter to UK industry, which the call for evidence that closed last month did, and maintain those measures at their current level until the TRA reviews them.

My hon. Friend the Member for Gordon mentioned agricultural imports. Our trade remedies framework will enable the TRA to investigate unfairly subsidised imports where they are injuring UK agricultural producers and to take action where appropriate. The Secretary of State for Environment, Food and Rural Affairs is working on a safeguards regime for agricultural products to address the issues that my hon. Friend identified.

My hon. Friend the Member for Hornchurch and Upminster asked whether the TRA should consist of two bodies. There are, of course, always different views. There is not an exact parallel. We have looked at systems across the world, as she knows from the evidence I gave to the Committee. However, I believe that we are setting up the TRA with the right level of independence to allow it to reach informed and objective conclusions, which includes clear projections for the TRA’s independence, impartiality and expertise. Other countries that use a single-body trade remedy system include Australia and New Zealand.

It is standard practice for the chair and the non-execs to be ministerial appointments. The other members would typically be appointed by the chair. That is the practice we have followed in relation to the Trade Remedies Authority.